Right now the half-dragon and the BURNDAYRAZ glyph are the only two ways to deal magic damage, so I definitely agree we need more. Still, just converting your attack from physical to magic is kinda circumstantial. Perhaps the flaming sword could add a set amount of magic damage to your attack?

Well I don't think it needs to be spectacular but it could be an interesting tool. It could give an option in dungeons such that instead of keeping burndayraz around you could use this and convert it when not needed. It alters kill priorities in general. And in some dungeons would be a wash(golems and goo's) in some dungeons would be an odd trade (goo's and goats) and sometimes you just don't want it. If it gave bonus damage I would feel it should have a backlash.

Given that it now would take up inventory space, this would leave it a very niche item. Basically for Goo Blobs and equivalent bosses only, which most of the time would be a shop-waster. That's why I think it should offer magic damage above your regular attack is the right way to go. This makes it a useful item even if you aren't facing enemies with resists. Also, this would make it the only damage boosting item that is unaffected by either your attack bonus or base attack... sorely needed for Elves, Gnomes, Goblins, and Dwarves who are looking to compete with Humans, Orcs, and Trillings.